Do you know why you must master and understand the buyer mindset when selling your business?
Most business owners make the fatal mistake of thinking only about themselves. From a buyer’s perspective, this is both selfish and flawed.
What can you do?
Five powerful strategies help you understand the buyer mindset. At the same time, these five strategies have you resonate with buyers and stand out from the crowd.
How do I know?
I started my eLearning company, Embanet, right out of school. I had no money, experience, or team. Living in my parent’s attic and running my business, I found a new best friend, otherwise known as failure.
My grit and passion kept me in the game long enough to uncover strategies for business success. And not any success, but massive business success.
With business success came the proverbial knock at the door from a buyer. The buyer was with a multi-billion dollar company and was smart and experienced.
I said “no” to the buyer’s 7-figure offer and “yes” to mastering the art and science of a liquidity event. Then, two years later, I said “yes” to a 9-figure offer from a different buyer.
Two things made the difference.
First, five strategies that helped master the art of the buyer mindset. Second, I created the 9-step roadmap of preparation for my liquidity event.
Today, I pay it forward through the 90-day Deep Wealth Experience. At the heart of the Deep Wealth Experience is the exact 9-step roadmap and five strategies.
Would you like to learn and master the five buyer mindset strategies?
Please keep reading.
Understand The Buyer Mindset By Uncovering A Buyer’s Painful Problem
Surround yourself with problem solvers, not problem creators – Robert Ringer
In the Deep Wealth 9-step roadmap, you prepare well before a liquidity event. Your preparation ensures you have a competitive bid with many buyers as part of the process.
You’ll identify the top three to five buyers at one point in the process. Your business solves a problem for each buyer. Before moving forward, your mission is to uncover the painful problem for each buyer.
The problem your business solves for each buyer may be different. You want to find out how your company solves the problem. There’s a good chance that your business solves many problems for a buyer. Part of your mission is to identify the most painful problem. The more painful the problem, the higher the value of your business to the buyer.
Once you understand the number one problem for the buyer, you do something most sellers don’t. At every opportunity, you’ll remind the buyer of why your business is a “must have” instead of a “nice to have.”
In a later strategy, you’ll learn about creating a powerful narrative. And when it comes to the narrative, welcome to the art side of a liquidity event.
On our podcast, The Deep Wealth Podcast, many experts share how narrative drives value. A valuator of companies shared how the narrative is 80% of a company’s value. The other 20% of the value comes from the data and facts.
The first strategy for mastering the buyer mindset have you understand the “what.” Let’s focus on the following strategy to help you understand the buyer mindset.
The Power Of Understanding Why A Buyer Wants To Solve A Problem
A problem well stated is a problem half-solved – Charles Kettering
Understanding the buyer mindset has you go from believing to knowing. You stop believing why a buyer showed up to your liquidity event. Instead, you understand why a buyer wants to buy your company.
The first strategy had you uncover the painful problem a buyer faces. You now must understand the “why” behind the problem. When you know the “why” for each buyer, you see your business in a different light.
Some buyers may tell you the “what” and “why” of the problem they want to solve. Other buyers will not. Your preparation has you assume you’re on your own to figure things out.
Part of your exploration has you perform two thought experiments. Each thought experiment reveals the buyer’s mindset until it’s in clear view for you.
For the first thought experiment, imagine what it means to the buyer if the problem isn’t solved. You and your team can go through scenarios of how the business suffers. You can imagine what happens to the buyer’s business over time.
For the second thought experiment, imagine what it means to the buyer to solve the problem. Then, you can imagine what the buyer’s business can now achieve and what this means.
Understanding the “why” helps you craft a compelling narrative. The art side of a liquidity event has you both show and tell the buyer a bright future. When it comes to enterprise value, the hope of a better tomorrow plays a prominent role.
With the “what” and “why” covered, let’s move on to the next strategy for understanding the buyer mindset.
Why You Must Uncloak Who The Decision Makers Are For A Buyer
I am not a product of my circumstances. I am a product of my decisions – Stephen Covey
The power of the Deep Wealth 9-step roadmap is having you go from believing to knowing. You can’t believe you have the best deal, you must know you have the best deal.
Part of capturing the best deal is to identify the decision maker. You can’t assume the people at the deal table make the final decision. For example, the people at the deal table may need approval from a board of directors.
In the above scenario, the people at the deal table are there to gather information to present to the board. You must now decide if you’re comfortable with the fate of your deal being in the hands of people you won’t meet.
The power of a competitive process is choice amongst buyers. For example, you may take a pass on a buyer who needs board approval. In this instance, you take comfort in knowing that you have other buyers as choices.
Once you identify whom the decision make is for the buyer, your preparation continues. But, again, your mission is to determine how the decision-maker operates.
Some decision-makers rely on team consensus. Other decision-makers come to their own conclusion. Once again, preparation has you go from believing to knowing.
When you know who the decision maker is, you begin to understand the buyer mindset. You also adjust your narrative to resonate with the decision-maker.
Do you know the one area most business owners overlook to their detriment?
Please keep reading.
Understanding The Buyer Mindset Has You Know How The Buyer Pays For The Deal
Most deadly errors arise from obsolete assumptions – Frank Herber
Business owners make the fatal mistake of believing the deal is as good as when they receive a letter of intent. The truth is that a deal is as good as done only when you receive the money.
And when it comes to receiving the closing funds from buyers, many things can happen. When you understand the buyer mindset, you also understand how a buyer intends to pay for the deal.
You need to know if the buyer has cash on hand or wants to pay with stocks or through financing. When it comes to payment forms, there is no right or wrong. All that matters is what you prefer.
Any payment other than cash carries risk. The examples are endless. For instance, a buyer planning to receive outside financing may not get the funding. Or you accept stock instead of cash, hoping the stock goes up in value. When it is time to cash out the stock, your heart sinks as the stock has decreased in value.
To protect yourself, understand the buyer mindset before signing the letter of intent. Then, you go into your deal, eyes wide open, knowing both the upside and downside of the payment form.
You’ll find another buyer if you don’t have a risk appetite for financing. The power of understanding the buyer mindset is clarity. Clarity is power.
Speaking of clarity, the next and final strategy is all about clarity.
Creating A Powerful Narrative To Help You Capture The Deal Of A Lifetime
Preparation today unlocks the deep wealth of your business tomorrow – Jeffrey Feldberg
The four strategies revealed help you understand the buyer mindset. You now know the “what,” “why,” “who,” and “how” of the buyer. Along the way, you go from believing to knowing.
Strategy five brings it all together by having you create a compelling narrative. If you have five prospective buyers, you’ll create five different narratives.
Your narrative provides clarity to the buyer. The narrative you create shows how your business solves the buyer’s problem. Your mission is to show how there’s a bright and prosperous future after the deal closes.
Along the way, you’ll show and tell how the buyer’s future becomes better with the problem solved. You’ll be sure to show how your business adds strategic value.
Knowing who the buyer’s decision maker is, ensures your narrative resonates. For example, a narrative for a risk-taking CEO is different than one for a conservative board.
Your narrative provides clarity, excitement, and hope for buyers. On the flip side, you have clarity on what makes the buyer tick from decision-making to financing.
Understanding the buyer mindset has you capture the best deal instead of any deal.
Understanding the buyer mindset protects you from becoming a statistic. Up to 90% of liquidity events fail. Of “successful” liquidity events, 50% to over 100% of the deal value is in the buyer’s pocket.
The sale of your business is the largest and most important financial decision of a lifetime. You have one chance to get it right and want to make it count.
The five strategies revealed in this article give you the edge for your liquidity event. By understanding the buyer mindset, you become more relatable to buyers. What you say resonates with buyers and helps you build trust.
What can you do, and where do you start?
Please start with the first strategy and stay with it until you master it. Once done, move on to the next strategy. In short order, you’ll master all five strategies. Along the way, you’ll develop confidence and certainty.
If you’re like most business owners, you have the golden handcuffs. Your wealth is in your business. It’s only through a successful liquidity event that you unlock your wealth. Along the way, you’ll welcome financial freedom.
Look to your preparation as your North Star. The added benefit of preparation today is helping your business grow tomorrow. Indeed, preparation is the give that keeps on giving.
Speaking of gifts, The Deep Wealth Podcast reveals little-known but proven strategies. Listening to the episodes helps you unlock your business and personal deep wealth.
You can do it. I know you can. Here’s to you and your success!
Your Biggest Raving Fan,
When it comes to your liquidity event, are you leaving millions on the deal table? Visit www.deepwealth.com/success to learn more.